Motivated, With Equity And They Want Help!! How Do I Approach This??
Here is the situation:
Homeowner is facing foreclosure the end of Oct. The first mortgage is for 288k and the second is for 73k. So if you do the math the total of the two liens is 361k. The home appraised for 410k two years ago.
My problem is I cannot get approved for a loan amount for that much. Is it possible for me to get the homeowner under contract at 361k, then get a buyer under contract for the 401k for a quick sell. How do I make sure I don't get screwed in the middle here? What stops the buyer and the seller from just cutting me out? 
Any opinions here would be greatly appreciated!
Kmaples25
A contract does.
Go give the guy $100 for a purchase option on the house, put an ad in paper and wholesale it out.
Something like this.
Investors special, 60k instant equity CASH ONLY DEAL. 385k Gets it.
SERIOUS BUYERS ONLY. CALL #BR5549
Using the same appreciation rate my city has, values have risen 9% average over the last 7 years. lets round it off to 10% to make it easier.
1st year 410k + 41k = 451k
2nd year 451k + 45k = 496k
Ok lets be more modest and realistic and keep it at 5% Appreciation.
it comes out to 445K
You sell for 385k = 60k instant equity.
and 24k to you.
This is definately one that you should call in an investor in on (after you get the option) Some here might even be interested in it and give you a percent of the equity.
good luck,
G
That isnt going to be as easy as you think.
What kind of investor will come and pay all cash for a deal where there is 10% equity? That is based on appraised value too. When using appraised value, you better back out commish and closing costs. Any investor that wants to keep being an investor is going to back out those costs and even a % discount. Add to that a high end home is always appraisal high.
I would strongly consider passing on this deal, or trying to get the owner to pay some of the back, or a short sale or something.
This deal to me is a "tweener", it isnt full of equity, but it is also a pricy house. If you had it cheap (like under 150k) then you subto it, and dont worry about the 10% only of equity.
For a high end property like that, I would second, third, fourth guess myself.
Sorry I dont have a peachy outlook, but I gotta make sure that if I am buying a high end home that if I get stuck with it, that I can afford to get stuck.
GL
Or you can go for a quick $3k-$5 flip. Assign the contract over to another investor. Give all the extra equity to the investor you bring in. You can pocket a quick $ with little effort on your part and the new investor brings the financing. Record a memorandum of agreement to cloud the title and a quitclaim deed to release your interest in the property to the new investor.
Quote:
On 2003-08-02 00:32, justmjc wrote:
Or you can go for a quick $3k-$5 flip.
Yeah right!
I am sorry but if you called me up with this deal I would hang up on you. Much less give you a fat fee.
They don't even know what the property is worth. A two year old appraisal is worthless.
I'm sorry to rain on your parade, but I'd walk away from this deal.
Myself (and investors that I know) only pay 65% of the Appraised Retail Value.
We take additional monies of for any repairs. This is pretty standard.
At 90% of the Appraised Retail Value, there isn't any profit for an investor.
Hope This Helps,
Mrs. Meltzer
Same pass the second is the problem!!
SKI
I would put it under contract subject to partners approval, then go to the 2nd lein holder and ask them to discount it. If they feel that they will be left out altogether if the home is foreclosed upon they may go for it (something is better than nothing). If they are willing to take 20k instad of 70k there's enough equity to do the deal. Think about it? Look in my profile for my e-mail address and we can chat. Good Luck.
I don't get it.
Noone would put up $100 to make 24k?
I'm not saying go buy it cash and try to resell it.
Lets say you really wholesale it out and only make 10k
You've spent $100, put an ad in the paper put out 6 signs and made a couple of phone calls. hell if you don't sell it, and you can just call it gambling money and shrug it off.
Whats that? a 1000% percent return on your money? Probably closer to 5000% unless it takes you a year to sell it.
Unless a slew of crackheads moved across the street or your local nuclear power plant has started leaking into the groundwater, its an almost SURE bet that property values have increased. I'll go out on a limb here
and say that you'd be hard pressed to go into any decent neighborhood and find where values have not increased in the last 2 years, especially in an area that has 300k homes. I know theres exceptions to the rule, but they would be just that exceptions.
If you wait on perfect deals, you'll wait forever.
G'Luck
G
Thanks to all, for your time and wisdom.
I just wanted to let you know what came of this situation.
I finally decided to refer this deal to a realtor that I work closely with for 25% of his commision off the sale of the subject property and purchase of their new home.
Because of the fact that I don't have the money to take a risk on not being able to resell this property, I figure this is the best way to go.
Thanks to all,
Talk to you on the next deal.
Kmaples25
kmaples,
Glad to meet you.
You did exactly what I have been saying only in your words.
No Fear, No Liability, No Money, welcome to the wonderful world of Bird Dogging and you are getting paid for doing it.
Very wise decision on your part concerning this particular property.
Welcome on board this board, let's see if your real estate agent friend can get the job done for you.
John $Cash$ Locke
I agree with wbattle. You need to short it. Get the first to take a 5% discount and the second to take a heavy discount. Do that and you're in business.
Good luck with the realtor, I hope it works out for you.
I also hope you put in the proper contingencies since the realtor only gets paid if you get the deal done. In addition to a realtor I would get out your paper, call some investors and see if you get more responses than just through the realtor.
I would also make sure the numbers work to someone who investigages the deal. I passed on an investor flip last week who was using a realtor just as you because the underlying deal was bad. What did I see the very next sunday? The realtor was scrambling in the paper to get out of the situation.
I also hope you have plenty of time to work the deal..but more importantly, have the proper outs on all sides.
Keep us posted, you have some interesting issues to deal with before getting that easy bird dog check..
You would have been better off finding an investor that knows about short sales. you could have worked out a deal with him where you would have made a lot more than with a realtor who may or may not work hard at selling the listed property. With an investor, if they don't work on properties, they don't eat well. I don't know about you, but I like to eat well and pay people to bring me deals like this. Part of something is worth more than 100% of nothing or a maybe before it gets foreclosed on.
WallStreet,
What type of contingincies would you put in an agreement? I have not done anytype of agreements with them, only verbal. what type of contract would you use?
Through my short sales career I networked with various different suppliers that they would offer services and so would I. But all agreements were verbal, and if you broke the agreement the other party would then cease to give you leads. So that's the only way I have ever done it.
Any advice, knowledge, or direction on this would be much appreciated. It is not to late to put something like this together.
Kmaples25